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The series of troubles in mutual fund debt schemes refuse to die down. The shocking moratorium on YES Bank, imposed by the RBI, has cast a shadow on the ₹2,800-crore mutual fund investment in debt instruments issued by the bank.
Nippon India Mutual Fund, one of the largest investors with a ₹2,483-crore exposure in YES Bank debt paper, has been marked down to zero. It has also restricted fresh investments in six of the schemes, which had exposure to YES Bank debt to ₹2 lakh each.
The six schemes which have exposure to YES Bank bonds include Nippon Hybrid Bond Fund, Credit Risk Fund, Equity Hybrid Fund, Stategic Debt Fund, Retirement -Wealth Creation Fund, and Equity Savings Fund. A Nippon India Mutual Fund spokesperson said while YES Bank has been marked down to zero, it has not done segregation of the asset. Segregation or side pocketing is allowed only on SEBI-defined triggers, he added.
Investments of ₹2,483 crore by the six schemes in YES Bank were valued at ₹1,746 crore on Wednesday, and this has been marked down to zero as on Thursday due to uncertainties around the realisable values. However, the fund house said the action does not in any manner indicate any reduction or write-off of amount repayable by YES Bank or eventually realisable by the schemes holding these instruments.
The key decision driver for the steps taken by Nippon India Mutual Fund is the lack of information and understanding on how regulations and decisions of the RBI and government will pan out since there is no precedence, it said in a statement to investors.
Meanwhile, Mahindra Mutual Fund, which had net exposure of 1.07 per cent to YES Bank debt through its Mahindra Credit Risk Yojana, exited completely in February.
Most of the mutual fund hoses, including Edelweiss AMC and Kotak Mutual Fund, have stopped investors redemption proceeds being credited into their YES Bank accounts.
Investments of ₹2,483 cr by the six schemes in YES Bank were valued at ₹1,746 crore on Wednesday, and this has been marked down to zero as on Thursday
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